Rover's Weekly Market Brief - 4/1/2016

April 1, 2016 |

Indices

Dow Jones: 17,792.75 (+1.6%)

NASDAQ: 4,914.54 (+3.0%)

S&P 500: 2,072.83 (+1.8%)

Commodities

Gold: 1,223.40 (+0.2%)

Copper: 216.15 (-3.1%)

Crude Oil: 36.78 (-7.6%)

Economy

The labor market made further gains in March as nonfarm payrolls rose to 215,000 while the labor force participation rate rose marginally to 63%. The increase in the participation rate drove the unemployment rate slightly higher to 5.0%. Sectors seeing large payroll increases included transportation and trade, construction, and retail. However, manufacturing saw payrolls decline. Despite a positive report, the results may not have been strong enough to make the case for a Fed rate hike in April.

Consumer spending, despite rising disposable personal incomes, came in weaker than expected. Personal income increased 0.2% in February while spending increased a mere 0.1%. January spending was drastically revised downwards to 0.1% from 0.5%. The reduced spending reflects a higher personal savings rate. The personal savings rate rose to 5.4% in February from 5.3% in January.

The ISM Manufacturing Index had an above-50 reading of 51.8 in March, suggesting expansion in manufacturing. The slightly higher-than-expected reading was driven by increases in new orders. The strength of the ISM new orders reading gives some analysts reason to believe the FOMC may decide to raise the Federal Funds Rate in June. The Dallas Federal Reserve’s manufacturing survey also showed decreased weakness in the sector.

Markets

Cal-Maine (NASDAQ: CALM) recorded a 2.8% drop in revenue and a 26.1% rise in net income for Q3 2016 YoY. Diluted EPS rose 25.5% to $1.33 from $1.06 the same quarter the past year. The revenue growth was driven by higher average selling prices for shell eggs but checked by lower sales volumes. Net income was buoyed by lower feed and farm production costs.

Lululemon (NASDAQ: LULU) saw its revenue and net income rise 14.7% and 11.3%, respectively, for 2015. Diluted EPS also rose 13.9% to $1.89 from $1.66 the previous year. The revenue growth was driven primarily by rising online sales and supported by new store sales. Geographically, sales were strong in the US, Europe and Asia and weak in Canada. Total comparable store sales increased 5%.

Lennar (NYSE: LEN) posted a 23.9% and a 14.2% fall in revenue and net income, respectively, for Q1 2016 YoY. Consequently, diluted earnings per share climbed 3.6% to $0.63 from $0.50 YoY. A slow but growing demand for housing, improving labor market and rising consumer confidence lifted revenues for the residential home builder. New orders are up 10% year over year.

Paychex (NASDAQ: PAYX) reported a revenue increase of 6.9% and a net income rise of 6.5% for Q3 2016 YoY. Diluted EPS grew 8.7% to $0.50 from $0.47 YoY. Revenue rose across all business segments with payroll-services surging 3.7% while human-resource-services increasing 11.6%. A growing client base and increasing revenue per check drove the revenue growth.

Looking Ahead

Upcoming Events:

Tuesday April 5 — International Trade (Measure of US exports and imports)
Wednesday April 6 — FOMC Minutes (Minutes of the Fed’s policy meeting)

Earnings Calendar:

Monday Tuesday Wednesday Thursday Friday
Hudson’s Bay (HBC.TO) Walgreens (WBA) Monsanto (MON) CarMax (KMX) Argan (AGX)
Hang Seng (HSNGY) Darden (DRI) Constellation (STZ) ConAgra (CAG) Madison Pacific (MPC.TO)

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